The UK government is failing to put in place incentives for investment in fibre-to-the-home (FTTH) broadband, inhibiting innovation and potentially damaging the economy, according to Shadow Cabinet Office Minister Chi Onwurah.

Speaking at the FTTH Council Europe's annual conference in London, Onwurah said that digital infrastructure is the platform for innovation, both now and in the future.

She bemoaned the decision by European Union leaders to cut the Connecting Europe Facility (CEF) by 85 percent, claiming that this is “not a positive signal for the investment priorities of Europe”. 

“Why is it that companies that announce large long-term investments, such as in FTTH, will find that their share prices suffer? If BT was committing to put £1bn a year into fibre for the next 10 years the markets would not reward that. Why is it that we do not reward long-term investment?” said Onwurah. 

“As a Labour politician, I am pleased to say that we are looking into the long-term investment incentives as part of our review of markets, in order to know what the incentives are for what we call 'responsible capitalism', which is partially about taking a longer term view of the rewards for investment.” 

According to the latest figures from the FTTH Council Europe, deployment of FTTH continues to grow steadily, but the gap between the leaders and laggards is increasing. The UK still has one of the lowest FTTH penetration rates in Europe, with less than 0.1 percent of homes in Britain connected to fibre.

Most of the so-called ‘fibre’ broadband in the UK is fibre-to-the-cabinet (FTTC), which means that fibre optic cables are laid to street cabinets, and then traditional copper cables are used to connect homes and businesses to the street cabinets. FTTH means that the fibre link continues from the street cabinet into the building. 

Onwurah told Techworld that, while the UK does not even figure in the FTTH Council’s Market Panorama, which ranks countries according to the percentage of homes taking a direct fibre connection, the picture for the UK is not wholly bad.

“We have some of the highest rates of take-up of broadband; we also have the largest portion of our economy which is online, and we have a very burgeoning creative industry,” she said. 

The UK does have two real problems however – a growing digital divide and no plan for the future. In particular, Onwurah highlighted that the coalition government currently has no plans for Broadband Delivery UK (BDUK) beyond 2015. 

“My constituents in Newcastle are not demanding fibre to their homes right now. However, they are demanding decent broadband, which is not what they were demanding three or four years ago,” she said.

“When that demand comes, these networks take years to build out, and they also take even longer in terms of having a regulatory vision that puts in place the incentives to get them built out, so I am very concerned that we don’t have a plan from government or from many of our major providers that includes FTTH in significant numbers.” 

In what should be a wake-up call for the government, Alexander Bard, Swedish philosopher and 'Internet sociologist', who was the keynote speaker at this year’s FTTH Conference, added that it is now possible to prove a direct connection between the quality of broadband provision and the number of Internet start-ups in any given city. 

He pointed to Helsinki, Stockholm, Copenhagen and Berlin as examples of cities where fast and robust broadband infrastructure has led to the emergence of a thriving Web start-up community. 

“Hamburg, Munich, Frankfurt are not even on the map; London is not on the map; Paris is not on the map. Nobody who looks for Internet start-ups in Europe even bothers about going to London and Paris at the moment,” said Bard. 

“We can empirically prove today, as economists, that the stronger, faster broadband you provide to where people actually live, the more of a new economy you will have in place there five years later. That's no longer a discussion, that's a fact.”

For further insight into FTTH penetration rates in Europe, the FTTH Council Europe's Panorama report is available here. To be included in the ranking, a country must have more than 1 percent of households connected to FTTH.